Lessons to be learned from foreign affairs experience

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In the last 12 months a number of the Top 100 have disappeared from the list following acquisition by larger organisations.

Examples include control systems integrator HG Group, automotive paint specialist Sinemaster, and temporary access systems provider Accession Group.

Both HG and Sinemaster were acquired by large overseas buyers and this interest from multinationals is a trend that we are increasingly seeing when acting for shareholders of SMEs looking to sell their business.

While large UK corporates have long been a target for overseas acquirers, our experience shows that there are some important lessons for SME owners looking to sell to international buyers.

Identifying potential buyers: by their nature SMEs may often be “under the radar”.

Working with a corporate finance advisor who has the resource and experience to identify and transact with overseas buyers helps with this. As a member of Kreston International, BHP is part of a network with international representation in over 100 countries and in recent assignments we have engaged with potential acquirers in the US, Japan and Europe.

Proper preparation: M&A always brings some element of risk: is the buyer getting what he thinks?

Rightly or wrongly the perception can sometimes be that SMEs present more of an acquisition risk and this can be exacerbated when the potential purchaser is an overseas entity.

Key to minimising the impact this might have on a buyer’s appetite is proper pre-sale preparation to mitigate perceived risks.

Be flexible: yes, certain characteristics might be classed as “stereotypes” but overseas buyers bring with them their own culture and way of doing business and it’s important to understand and accommodate this in any sale process.

So, in summary, while the “girls and boys next door” will quite rightly always remain attractive future partners for our region’s SMEs, it would seem daft to ignore the fluttering eyelids of suitors from more exotic climes.